Determining the total provincial amount to be spent on education is only part of the process. Almost all of the money spent by the provinces on education is actually given to school boards. This occurs through a funding formula whose purpose is to provide a basis for determining how much money will be given to each school district. While each province has a different formula, almost all have the same basic components.

Components of Formula Funding

There are two basic formula elements through which most provinces provide funding to school districts. In most cases, the first and largest amount of money takes the form of a block grant based on the number of students. Sometimes the student count is weighted, such that students in more expensive programs (e.g., special or vocational education) or those who are taught in more expensive to maintain settings (e.g., small or remote schools) are given a higher value in the count than other students in recognition of the extra costs of educating them. Typically, at least half of the total funding is distributed on a per pupil basis.

The second component is categorical funding, in which a province provides additional funds for particular programs or services. There are two reasons for categorical grants. First, they may be based on the assumption that school boards would not spend enough on such activities of their own accord, hence the province ties its money to the activities it wishes to support. Examples of categorical grants include those for special education, language education, Indigenous education, or English as an Additional Language. Second, a province may provide categorical funding as a way of recognizing that the costs of certain services, and therefore the provincial contribution to those costs, will vary a great deal from one district to another. An example would be the cost of transporting students by school bus. An urban district may have quite low transportation costs, while those of a rural district might be much higher. If each received the same funding per pupil, the rural division would have less available for instruction after it paid necessary transportation costs. Thus, most provinces tie transportation funding to actual costs through a categorical grant.

Vertical and Horizontal Equity

These two components of funding take into account two different notions of fairness as recognized in the literature on education finance. One is horizontal equity, the idea that everyone should be treated the same. The principle of horizontal equity suggests that per-pupil spending should be roughly the same in all schools and all school districts.

In contrast, the concept of vertical equity means that fairness lies in recognizing that different people have different needs, and that to treat everyone the same is patently unfair. For example, because rural schools may spend much more money on transporting students, to give them the same amount per student as urban schools is not equitable. Nor does it seem reasonable to assume that students who grow up in wealthy families, with access to good housing, plenty of food, and a steady family income, should have the same amount spent on their education as students who grow up poorly housed and poorly fed. Some students will clearly require more time and attention if they are to be successful learners. Students with special needs may also require extra supports to be successful. If schools are to promote equal opportunity for all students, the principle of vertical equity suggests that they will need to pay attention to and support some students more than others. Provincial funding formulas attempt to create both horizontal and vertical equity by providing equal spending for each pupil in the same category (e.g., elementary, secondary) but also differential spending per pupil across categories (e.g., special or vocational education).

The importance of the various components within the total provincial funding scheme varies from province to province. Some provinces put more weight on block grants, while others emphasize categorical grants or equalization. It is important to realize that there is no perfect funding formula because people will disagree about which aspects are most important.

Most provinces contain many kinds of school districts urban and rural, richer and poorer, with smaller or larger schools, newer or older buildings, more or less experienced (and expensive) teachers, more or fewer students who do not speak English or French, and so on. The many, many factors that can affect the cost of education make it impossible for any funding formula to take all the differences into account in a way that all parties will perceive as fair. Such decisions, like so many others considered in this book, are political choices that are informed by people’s goals and values. Most provinces make at least some changes in their grant structure almost every year and may introduce entirely new formulas every five to ten years to try to meet changing conditions, but whatever choices are made, some people will inevitably feel that the formula remains unfair (Levin, 2008).

Independent Schools

All provinces have at least a few independent (also called private) schools. An independent school can be defined as a school that is not governed by a public school board, and that is selective about whom it admits as students, whether the selection process is based on grounds of ability, religion, or some other criterion. Students are usually charged tuition fees. Most private schools in Canada are religious in orientation, though some are also based on language, ethnicity, or niche instructional areas of focus (arts, sports, etc.).

Provincial policies on the funding of private schools vary a great deal. Provinces such as Ontario, Nova Scotia, and New Brunswick provide almost no support for private schools, whereas Quebec and the western provinces do provide some public funding for private schools under certain conditions. As discussed in Chapter Two, many provinces have publicly funded dissentient schools; the difference is that these schools are not considered private under the terms of the definition given here.

In no province do private school enrolments make up a large proportion of the total enrolment. Table 5.7.1 offers public, private and home-school enrolment numbers for the 2018-2019 year. Enrolments in private schools range from just over 1% of the total student population in New Brunswick and Newfoundland to some 9.6% in Quebec and 13.1% in British Columbia. Despite the relatively low enrolment figures, however, public funding of private schools is still a matter of controversy since it raises many fundamental questions about what it means to have a public school system. In 2007, a proposal by the Ontario Conservative Party to extend public funding to private schools beyond the Catholic system became a key issue in the provincial election and played a major role in the Conservative’s being defeated by the Liberals. In 2020, the Court of Appeal in Saskatchewan upheld provincial funding for non-Catholic students in Catholic schools, which was a reversal of the lower court decision that would have stopped the Government of Saskatchewan from publicly funding non-Catholic students who wished to attend Catholic schools. In 2021, the Supreme Court of Canada dismissed the application to appeal the decision, thereby establishing that public funding will remain for non-Catholic students who attend Catholic schools in Saskatchewan.

Table 5.7.1

2018-2019 Enrolments in Public, Private, and Home Schools

Source. Statistics Canada. Table 37-10-0109-01: Number of students in elementary and secondary schools, by school type and program type. https://doi.org/10.25318/3710010901-eng

Capital Funding       

In the world of school funding, capital refers to durable items such as buildings or major pieces of equipment. Most provinces fund school buildings (either new or renovated) through a separate process. Typically, school districts must submit proposals justifying their requests to build new schools or to renovate existing ones. Provincial governments then approve or reject such projects on a case-by-case basis. Once approval is given, the province pays most or all of the cost, depending on the policy in each province, up to a specified level. Provinces usually have a set of standards for determining what can be included in a building, and how much the province will contribute. However, the actual responsibility for construction, including hiring architects and contractors, usually lies with the school board. In 2017/18 across Canada some $5.3 billion was spent on public elementary and secondary school capital expenditures (Statistics Canada, Table: 37-10-0064-01).

A new trend in capital project development has been the introduction of public-private partnerships, known in Saskatchewan as P3 schools (Government of Saskatchewan, Joint-Use Schools Project). Using this financial model, schools have been built as joint-use facilities shared by the Catholic and public school systems. The school systems share facilities in the buildings such as multi-purpose rooms, gymnasiums, community resource centres, and they share custodial and maintenance costs. The private sector partners assume the risk of construction, and there exists a 30-year maintenance warranty to ensure that the building will remain in good condition for three decades. However, other provinces, including Manitoba in 2018 and Alberta in 2014, have rejected the option, as there is no consistent evidence to support that the costs, regulations involved, and transparency in operation are more facilitative than traditional means of funding capital projects.

A new school can cost anywhere from $1 million to $25 million to build depending on its size, facilities, and location. Of course, schools in remote northern areas are much more expensive, as are schools that contain vocational facilities, labs, or swimming pools. A smaller province, such as Manitoba or New Brunswick, has around 700 schools. If a school lasts approximately 75 years, then such a province would need to replace some 10 schools a year, at a total cost of $50 to $120 million annually. At the same time, other schools could require extensive renovations or additions, or new schools are needed in new areas. In most provinces, while the rural population is declining and requires less space, urban areas are growing requiring new schools. So even if overall enrolment is declining, new school buildings are likely to be needed. Then, too, if many school buildings are old, pressures for capital spending will also be higher. In other words, a lot of money is required to build and maintain school buildings.

During the 1990s many provinces reduced spending on school capital as part of their overall effort to cut their budgets. The result is that Canada now has many older schools that require extensive repair or renovation, putting yet another pressure on provincial budgets. Provinces may spread out the cost of building through amortization, which is essentially what a family does when it buys a house and repays the cost plus interest over a number of years through a mortgage.

In the last few years, there has been an increase in school capital projects, with architects partnering with teachers, school leaders, and community members to create plans for buildings that are structurally and educationally innovative. In addition, there is more emphasis on the incorporation of educational technology to support learning, and/or questions of the extent to which school space might be reduced as more students learn remotely. As we have seen during the COVID-19 pandemic, however, although remote learning is a popular option, most families and students prefer to study in a school facility where relationships, extra-curricular options, and immediate access to the social world of education is available in addition to academic programming.